Israeli warplanes and combat helicopters have bombarded targets in the Gaza Strip, in continuing retaliation for Palestinian attacks on Israelis. Doctors say dozens of people were injured, including four seriously in the latest attacks.

For the second day in a row, Israeli aircraft launched strikes against Palestinian targets, this time hitting a large compound in the center of Gaza City.

The compound that was hit contains the offices of the Palestinian security and intelligence services, as well as a large prison.

Loud explosions rocked the area as fire, smoke and debris rose over the city.

At the time of the attacks, streets were crowded with school children, and the explosions sent them running in panic.

The army says the air raids were in response to the firing of a new kind of rocket from Gaza into Israel.

The rockets, called "Qassam II," are built by members of the militant Hamas group.

Earlier, Israeli tanks, soldiers and armored personnel carriers launched an incursion into the West Bank city of Nablus.

Israeli soldiers clashed with Palestinian gunmen near the Balata refugee camp before withdrawing after about two hours. There were no reports of serious casualties.

That raid was apparently in response to the killing of two female Israeli soldiers on Sunday by two Palestinian gunmen. Israeli security forces shot both the gunmen dead.

Israeli cabinet minister Tzipi Livni says the Jewish state has the right to defend itself and its civilians against rocket and shooting attacks. "It is the responsibility of the Israeli government to keep security and protect the life of Israeli citizens and that is why we are fighting terror with every measure that we think is necessary," she said. "It is not only about retaliation."

United Nations Middle East envoy Terry Larsen says the attacks and retaliatory strikes by both sides will not end until there is a realization that armed force will not solve the Israeli-Palestinian conflict and bring an end to more than 16 months of violence. "At the core of this is the necessity of a policy change where the conceptual understanding has to change," he said. "There is no military solution to this conflict, there is only a political solution. The violence and the terrorism will continue unless the core political issues are addressed."

More than 1,100 people, mostly Palestinians, have died since the uprising against Israeli occupation erupted in September 2000.